End of Wal-Mart Layaway Hurting Discount Giant?
In today's credit card society--layaway has all but gone away. The latest to join this trend is Wal-Mart . The discount giant says it will discontinue the service at all its stores by the end of this year. Some are accusing Wal-Mart of turning away from its core customers. And others are saying this decision is hurting Wal-Mart's troubled stock even more.
David Strasser is an analyst from Banc of America Securities and Jonathan Asher is President of Dragon Rouge USA. Both appeared on "Power Lunch."
Strasser believes that it's hard to say if stopping layaways hurts Wal-Mart but he says it's part of Wal-Marts efforts to expand its consumer base. He says the company doesn't really have the management team to match their ambitions. He says that while some customers may be hurt--the company is still offering discount items like the $4 prescription drug.
Strasser did say that Wal-Mart competitor Target is doing well--because its customers are doing well.
Asher says Wal-Mart is trying to move past its image--and that's difficult to do. He says the company should try and walk a fine line between reaching out to new customers and keeping the old. He says the company is more than likely growing too fast. Asher says Wal-Mart could focus on such issues as better product mix and store design.
Analyst disclosure: Banc of America Securities has had or has investment banking and other business with WMT and TGT. It owns more than 1 percent of stock in each.